Funko Beats Q3 Earnings Estimates, Raises 2024 Adjusted EBITDA View

Core Insights - Funko, Inc. (FNKO) reported third-quarter 2024 results with both revenue and earnings exceeding Zacks Consensus Estimates, despite a year-over-year revenue decline [1][4] - The company achieved a significant increase in gross margin, leading to better-than-expected profitability, prompting management to raise its full-year adjusted EBITDA guidance [1][13] Financial Performance - Adjusted earnings were 14 cents per share, surpassing the Zacks Consensus Estimate of 4 cents per share, and improved from 3 cents per share in the prior year [4] - Net sales were $292.8 million, a decrease of 6.4% from $312.9 million in the previous year, but above the Zacks Consensus Estimate of $289 million [5] - Gross margin expanded by 770 basis points year-over-year to 40.9%, aided by improved inventory reserves [5] - SG&A expenses decreased by 1.4% to $92.7 million from $94 million in the prior year [6] - Adjusted EBITDA rose to $30.9 million from $25.4 million in the year-ago period, with an adjusted EBITDA margin increase of 250 basis points to 10.6% [6] Segment Performance - Core Collectible sales declined by 2.3% year-over-year to $227.8 million, while Loungefly net sales fell by 17.6% to $47.3 million [7] - Other net sales decreased by 20.8% year-over-year to $17.6 million [7] - Geographically, U.S. net sales decreased by 7.4% to $194.4 million, and European sales fell by 9.1% to $74.5 million, while Other International sales increased by 13.5% to $23.9 million [8] Guidance and Outlook - For Q4 2024, management expects net sales between $280 million and $294 million, with a gross margin of 38-40% [10] - Adjusted EBITDA is projected to be between $17 million and $22 million, down from $23.5 million in the same quarter last year [11] - Full-year 2024 net sales outlook has been revised to $1.037-$1.050 billion, down from the previous range of $1.047 billion to $1.103 billion [12] - However, full-year adjusted EBITDA guidance has been raised to $85 million to $90 million, up from the previous forecast of $65 million to $85 million [13]